"Portuguese political pandemonium continues today as austerity fatigue has led to the resignation of several key ministers and we could now be looking at the possibility of early elections," said Lee McDarby, head of corporate and institutional treasury dealing at Investec Bank.

Portugal's 10-year government bond yields hit 8% and the country's benchmark stock index shed more than 6% Wednesday after the finance minister stepped down and the foreign minister announced his resignation. Portuguese opposition parties are calling for an early election, though Prime Minister Pedro Passos Coelho insists he will not resign.

Credit rating agency Standard & Poor's downgraded three European banks -- Credit Suisse(CS), Deutsche Bank(DB) and Barclays(BCS) --- citing worries over the size of their investment banking portfolios and the impact of new regulations. Shares in all three banks were dropping by roughly 3%.

Meanwhile, Asian markets ended with losses. The Hang Seng index led the move down, dropping by 2.5% as investors fretted over slower economic growth prospects in China. The Shanghai Composite index slipped 0.6% and the Nikkei in Japan eased 0.3%.

American investors head into Wednesday awaiting a pair of reports that will serve as a prelude to the government's closely watched monthly jobs report Friday.

U.S. stocks gave up early gains to finish lower Tuesday as clashes in Egypt intensified. U.S. markets conclude trading at 1 p.m. ET Wednesday and will be closed Thursday in observance of Independence Day.